Counteroffers, Secrecy, and Fear

Counteroffers are a fairly common occurrence in technology and other competitive job markets, and much of what we think we know about counteroffers seems to originate from agency recruiters. Google counteroffer and we find articles with fear-inducing titles.

There is nothing wrong with recruiters writing articles about counteroffers. You are reading one now. Many provide ‘statistics’, while others contain anecdotes revealing the unfortunate fate of those who accepted. Spoiler Alert – In recruiter articles, those who accept counteroffers always die alone and penniless. These pieces aren’t necessarily biased or untrue just based on the source, but when recruiters are the source you need to understand one thing.

Recruiters NEVER benefit from an accepted counteroffer.¹

Counteroffers are the bane of a recruiter’s existence. Put yourself in a recruiter’s shoes for a minute. Over a few weeks you’ve identified a strong candidate, screened, set up interviews, debriefed, negotiated a salary, checked references, and an offer was accepted. You will be rewarded handsomely, as a fee might be in the neighborhood of 30K (sometimes less, sometimes more). If the recruiter is independent or self-employed, that’s a car. And then you get a call saying “My company made me a counteroffer, so I’m staying.” You just ‘lost’ a car. I’ve had it happen, and it burns.

Even if a counteroffer makes all the candidate’s wishes come true, it’s still never in the recruiter’s best interest for it to be accepted. Recruiters get paid when they get you a job with their client – not when their efforts result in a better job at your company. This is part of the reason the recruiter/candidate relationship has flaws, as the interests of the two parties are not always aligned. It’s no wonder some recruiters invest significant time in talking about counteroffers.

How do recruiters prevent counteroffer acceptance?

The best way to prevent a counteroffer from being accepted is to prevent a counteroffer from even being presented, and recruiters may take a two-pronged approach to protect their fee and the interests of their client. Here is a peek into the methods. (NOTE:These details are provided to benefit job seekers, and not as any endorsement.)

1. Find out why a candidate is considering new jobs. “Why are we talking?” This question sounds innocuous and usually comes across as an ice breaker, yet the answers prove valuable if a counteroffer is presented.

2. Get the candidate’s opinion on counteroffer early. “Have you ever accepted a counteroffer?” may come up in your first conversation with a recruiter. Candidates rarely admit that they would consider a counteroffer. If the recruiter can get a candidate to say they wouldn’t accept a counteroffer in an email, candidates should expect to see that email when a counteroffer is presented.

3. Tell stories and provide ‘statistics’. Many recruiters cite a National Employment Association study that says 50-89% (depending on where you find the statistic) of people who accept counteroffers will not be with the company after six months. I was unable to find any reliable source for that (date, sample size). Of the 34,000 Google hits on “National Employment Association”, over half contain the word counter or counteroffer. Seems odd, no? It appears the organization somehow merged or morphed into a couple others (NAPC or NAPS), but the statistic lives on. I’ve seen anecdotes that this stat has been used since the 70’s.

Others mention a Business Week figure at 90%, but all I was able to find was an article from 2004 that cites “some studies” and puts the number over 50%.

One may get the impression that recruiting firms are using statistics from other recruiting firms, as these studies seem difficult to verify. Anyone got a source? To get decent statistics, you need consistent methods of gathering data. Even the definition of what qualifies as a counteroffer is up for debate, so any stats are questionable.

Even without numbers, anecdotes work just as well.

4. Fear, shame, worthlessness. The statistic is delivered as “Most who accept counteroffers are gone in six months, either by choice or (dramatic pause) … termination.” People have a strong fear of being fired. Candidates will be told how they will never be promoted or given raises, will be a social outcast, and they will not be given interesting work. These are all possibilities, but obviously not guarantees, and someone who habitually forgets to buy the donuts could suffer a similar fate.

The recruiter may also remind you that your employer never really valued you in the first place. They might say “Sure, you got a raise – but you had to hold a gun to their head to get it. How much do they really care about you?”

5. Resignation. If a recruiter has ever offered to provide you with a resignation template, or to even tender your resignation on your behalf (it’s rare but it happens), it may have been a genuine act of kindness to save you time. A recruiter’s resignation template may include language intended to prevent counteroffer, and some are direct. “Let’s not waste time discussing what it would take for me to stay, as I have already passed on my firm commitment to a new employer.” If the candidate emphasizes that he/she does not want a counteroffer, resigning with a letter that says so is appropriate.

6. Transitioning. Once a candidate accepts an offer, a recruiter wants the candidate’s loyalty and interest to shift to the new employer. A lunch may be scheduled before start date to discuss projects. If there are skills that will need to be learned, the candidate might choose to get a head start. Interactions between employers and new hires have obvious benefits beyond the prevention of a counteroffer acceptance, but that will be in the recruiter’s mind.

I remember discussions in one recruiting office about which day of the week was most common for counteroffers to be given, and then suggesting that the recruiter get together with the candidate on that day.

When It Happens

When a candidate accepts a counteroffer, it usually sets off recruiter panic mode. The recruiter will remind the candidate of some things – why they were looking in the first place, opinions expressed about counteroffer, the dangers, their firm commitment to the new company, etc. As a last resort the recruiter might make a personal plea and mention the fee, or even their own family. Some people will say a lot of things for 30K.

I don’t have a problem with some of the things recruiters say as warnings against accepting a counteroffer, as much of the script contains real possibilities. Accepters might not get promotions, raises, or interesting work. We can question the morality of using fear to get someone to do what you want them to do. If the recruiter is honest and believes that the new job is best for the candidate’s career, it’s easier to justify what is said. I do have a problem with the statistics, and the recruiting industry’s willingness to throw around questionable numbers.

Secrecy

Statistics about counteroffers are impossible to measure when you consider the interests and incentives of the parties involved. Companies that counteroffer departing employees are best served to keep that fact private, as employees may pursue offer letters just for the sake of a raise or improvement and outsiders may question if the company pays market rates.

Likewise, those who accept counteroffers may be concerned with the word getting out, as it may genuinely impact attitudes towards the employee. Employees who accept counteroffers are likely asked to keep quiet about what happened, and it’s usually in their best interest to do so.

Based on the secrecy incentives on both sides, one might assume that the prevalence of counteroffers is likely higher than reported, and success/failure rate of counteroffer is difficult to assess.

Conclusion

Regurgitating outdated or questionable statistics as fact hurts the credibility of the recruiting industry. Counteroffers are all very different and impossible to classify or evaluate without knowing countless other details about the candidate’s situation and the organizations involved. When listening to recruiters’ opinions (including this article), it’s vital to keep the source in mind and make important career decisions based on all the information available. Ask yourself if the counteroffer will solve the issues you had with the employer, and if so whether your means of achieving these results (resignation) will make it difficult to stay.

¹ There is one extremely rare instance where a recruiter might benefit from a counteroffer. Say the recruiter places a candidate at Company A, and during the recruiter’s guarantee period (usually 90 days) the candidate accepts an offer from Company B, and then gets a counteroffer Company A. In this case it benefits the recruiter for the placement to accept the counteroffer from Company A so the recruiter will not have to refund a fee.

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3 comments

I appreciate your honest description of the situation and the motives of everyone involved. This immediately leads me to this question, which I realize is outside of your direct concerns as a recruiter: what are the best ways to ask for a raise, or better benefits?

At one of my jobs, I asked for a raise and was denied. I got an offer from another company, and then got a good counter offer. So I stayed with the company. If I had more success with the original request for a raise, I would have never gone on the job search.

So maybe it might save recruiters some effort if they help people in their field get a raise. Then you’re less likely to have counteroffers as a potential problem.

I also had not realized how good fees are for recruiters. At 30k for a placement, I guess a self-employed recruiter can live better than most of the people he’s placing in jobs with just six or seven placements per year. But to be fair, the stress in that kind of commission-only work would kill me.

Thanks, glad you enjoy the content. When possible I think it’s helpful to be transparent about the business, so candidates know the motivations that lead to certain discussions. I think this type of knowledge is important to job seekers, just as it would be helpful to know what the car dealer actually paid for the car, or whether or not the person selling you a television (and recommending the most expensive ones) works on commission.

Best ways to ask for a raise? That is not an easy question, but generally speaking I think people tend to ask without having any real plan of action. They ‘feel’ underpaid, so they decide to ask for more. You need to know you are underpaid (or have low benefits) and then make a case.

Part of this dialogue might be the numbers you see when recruiters ping you. If you consistently get emails from recruiters saying their range is 80-100K and you make 60K, it is worth further research to find if you are indeed underpaid.

Unfortunately, sometimes it takes the thought of losing you for a company to realize how much value you have to them, which is where counteroffers come in. If you want a raise and are willing to put your job on the line, asking for a raise and saying that if you aren’t given one you will start looking is an option. It’s essentially like asking for a pre-emptive counteroffer.

If you ask for a raise and are denied, perhaps it’s try and ask the manager to set up some goals (deliverables perhaps) that you could meet in order to get the raise. If I’m not worth more now, what can I do to be worth more tomorrow?

If recruiters help people in the field get a raise, no one will look for work and the recruiters will not have anyone to recruit! 🙂 Recruiters depend on at least some motion in the market. If everyone were always happy and entirely satisfied with their jobs, recruiters would not be very busy.

Recruiter fees have a wide range, but over the past 15 years I’ve seen fees go from a high end of 33% to a low of about 15%. Early in my career I earned less than those I was recruiting, but most highly successful recruiters in tech probably make as much or more than those they are recruiting. If you work for a large recruiting company that money has to be spread around of course, but a small company with low overhead should pay their recruiters generous commissions. Commission-based work is not for everyone, and some years are better than others.